In brief - As a result of the latest lockdown in Sydney, the NSW Government has re-introduced a number of emergency COVID-19 tenancy measures. The newest measures apply to both commercial and retail leases entered into prior to 26 June 2021, and contain a few key differences to the previous COVID-19 emergency regulations.
Definition of impacted lessee changed
Under the new Retail and Other Commercial Leases (COVID-19) Regulation 2021 (2021 Regulation), a lessor cannot take any "prescribed action" against an "impacted lessee" for failing to pay rent or outgoings between the prescribed period of 13 July 2021 to 20 August 2021.
The definition of "impacted lessee" has changed from the previous COVID regulations to mean any lessee:
who qualifies for the Micro-business COVID-19 Support Grant, the COVID-19 NSW Business Grant or the Job Saver Grant; and
whose turnover in the 2020-2021 financial year was less than $50 million.
The definition of "prescribed action" has remained the same, and includes eviction, right of re-entry, recovery of premises, forfeiture and damages, among other things.
Key differences of the Retail and Other Commercial Leases (COVID-19) Regulation 2021
There are a number of key differences to the previous emergency COVID-19 regulations. The 2021 Regulation:
1. does not entirely prohibit a prescribed action. The landlord may take a prescribed action if:
the matter is referred to mediation under the Retail Leases Act (regardless of whether it is a commercial or retail lease); and
the Registrar certifies that the mediation has failed to resolve the dispute;
2. places an increased burden on the tenant. There is now an express obligation on the tenant to give the landlord a statement claiming that they are an impacted lessee, and evidence to support this. This must be given as soon as practicable after the prescribed breach;
3. does not contain an express obligation on the landlord to renegotiate rent or other terms. Landlords are simply prevented from any prescribed action unless mediation has failed or the prescribed action is made on grounds unrelated to the economic impacts of COVID-19; and
4. expressly provides that a lessor and impacted lessee can agree to the parties taking action, such as a prescribed action or termination of lease.
Land tax concessions
The NSW Government also announced that commercial, retail and residential landlords will be eligible for a land tax concession equal to the value of the rent reduction provided by the landlord. Under section 5.7 of the Government Sector Finance Act 2018, any landowner who provides a rent reduction to their tenant between 1 July 2021 and 31 December 2021 is eligible to receive a reduction in land tax. This will be the lesser of either:
This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2021.